Dow Jones, the S&P 500, and Nasdaq price forecast after last week’s gain

By:
on Jun 26, 2022
  • For the week, the S&P 500 rose 6.4%, the Dow added 5.4%, and the Nasdaq gained 7.5%
  • Inflation expectations have eased
  • St. Louis Federal Reserve Bank President James Bullard played down the possibility of a recession

Wall Street’s three main indexes advanced last week as the data showed that growth in a key inflation gauge slowed, while St. Louis Federal Reserve Bank President James Bullard played down the possibility of a recession.

The Commodity Index, which measures prices for energy, metals, agriculture, and other commodities, weakened to a roughly two-month low on Thursday after hitting a multi-year peak earlier in June.

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According to the survey results, the year-ahead inflation expectations eased to 5.3% in June from a preliminary reading of 5.4%, but St. Louis Federal Reserve Bank President James Bullard also said that he would like to see the federal funds rate closer to 3.5% by the end of 2022.

With the range currently at 1.5% to 1.75%, that would require a further 175 to 200 basis points of total tightening during the rest of the year.

Investors are concerned about the risk of recession if the Fed acts too aggressively, but International Monetary Fund Managing Director Kristalina Georgieva said that the US central bank is on the right path to bringing down inflation, even if it results in an expected slowdown of the US economy. International Monetary Fund Managing Director Kristalina Georgieva said:

The path for the policy rate that the Fed has signaled is the correct policy to bring down inflation.

The US will unveil the final estimate of the Q1 Gross Domestic Product this Wednesday, and investors will continue to pay attention to the Federal Reserve commentaries looking for any clues.

S&P 500 up 6.4% on a weekly basis

For the week, S&P 500 (SPX) booked a 6.4% increase which marks the index’s first weekly advance since the week that ended May 27. S&P 500 closed the week at 3,911 points, but even with last week’s gain, the S&P 500 is down 5.3% for the month of June and 18% for the year to date.

Data source: tradingview.com

The current support stands at 3,800 points, and if the price falls below this level, it would be a “sell” signal, and we have the open way to 3,700 points. The upside potential still remains limited, but if the price jumps above 4,000 points, the next target could be 4,200 points.

DJIA up  5.4% on a weekly basis

The Dow Jones Industrial Average (DJIA) advanced 5.4% for the week and closed at 31,500 points.

Data source: tradingview.com

The first resistance level stands at 32,000 points, and if the price jumps above this level, we have the open way to 32,500 points. On the other side, if the price falls below 31,000 points, it would be a firm “sell” signal, and the next target could be around 30,500 points.

Nasdaq Composite up 7.5% on a weekly basis

For the week, the Nasdaq Composite (COMP) booked a 7.5% increase and closed at 11,607 points.

Data source: tradingview.com

The current resistance level stands at 12,000 points, and if the price jumps above this level, we have the open way to 12,500 points. The strong support level stands at 11,000 points, and if the price falls below this level, the next target could be 10,500 points.

Summary

The Dow Jones, the S&P 500, and the Nasdaq advanced last week as the data showed that growth in a key inflation gauge slowed, while St. Louis Federal Reserve Bank President James Bullard played down the possibility of a recession. St. Louis Federal Reserve Bank President James Bullard also said that he would like to see the federal funds rate closer to 3.5% by the end of 2022.

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